Hometrack research director Richard Donnell said: "The real driver of higher house prices is record low mortgage rates and strong demand from first-time buyers and investors who have no property to sell, which is compounding scarcity.

"With average mortgage rates currently at 3% or lower, compared to over 5% before the downturn, households have seen a significant boost to buying power."

New rules are due in April to ensure lenders are satisfied variable rate mortgagees are able to meet increased repayment rates when interest rates climb again.

It said cash buyers and investors make up 40% of the market and will not be affected.

Mr Donnell added: "The gap between supply and demand has been extended for the last five months and points to further price rises in the months ahead."